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01/03/2006:
"Iraq Oil Minister Resigns Under Pressure"
BAGHDAD, Iraq (AP) - Iraq's oil minister said Monday he resigned after the government last week gave him a forced vacation and replaced him with Deputy Prime Minister Ahmad Chalabi following criticism about fuel price increases.Ibrahim Bahr al-Uloum said he quit because the government raised fuel prices by nine times on Dec. 19, a decision he had strongly criticized.
``This decision will not serve the benefit of the government and the people. This decision brings an extra burden on the shoulders of citizens and caused an increase in the prices of all essential materials. It also caused a reaction on the Iraqi streets,'' al-Uloum said.
guardian.co.uk
Puppet State Brought Down By Price Controls?
...And get this: Iraq's on-the-books oil exports are at their lowest level in two years. No oil leaving and no oil coming in at least on the books. This is the stuff of which genuine revolutions are made.
Remarkable isn't it? What the rebels, insurgents, and terrorists have yet to accomplish the end of US puppet rule in Iraq may yet be accomplished by bad energy policy. And this policy was not only imposed after the US invasion but has been continued in the years since, leading to an ever-worse catastrophe.
The mystery to explain is why a country that is incredibly oil rich with the 2nd largest oil reserves in the world would face a massive shortage of all oil products. If you knew nothing more than this detail, and you knew something about the history of economic debacles, you might guess: price controls. You would be right.
From what I can gather from public sources, the government assumes ownership of all oil in the country. That hardly makes the Iraqi situation unique in the region, but what is unique is the combination of subsidies and price controls that led gasoline to be fix-priced at 5 cents per gallon until very recently.
You don't have to be an economist to know what the results of this policy would be. Not only does it lead to overconsumption. The number of vendors willing to distribute the stuff in the open market collapses. Whats left is bought in Iraq and sold to neighboring countries at a profit.
Thus does a policy designed to make oil cheap for all result in the bizarre world in which a country full of oil underground would not have any of the stuff available above ground.
